Zetor Tractors Shifts Czech Manufacturing to Asia Amid High Costs
Major Changes in Zetor Tractors' Production Strategy
End of Domestic Production After Eight Decades
PRAGUE, July 13 (Reuters) - The Czech Republic's Zetor Tractors will end domestic production after 80 years because of high costs and move manufacturing to Asia, it said on Monday.
Utilizing Joint Ventures in Asia
Expansion in India
Zetor, founded in 1946, said it would use an existing joint venture in India – where it has manufactured most of its tractors in recent years – for production, and also was looking for a partner in China.
Potential Partnerships in China
"Manufacturing small and medium-sized tractors in Europe does not make sense under the current conditions," Zetor operating director Robert Harman said in a statement.
Economic Pressures Driving the Shift
Comparative Cost Disadvantages in Europe
Costs and competitiveness are much debated in the European Union, as Europe faces a competitive disadvantage compared with the United States and China because its energy prices are much higher.
Material and Supplier Relocation
Zetor said materials are also 30-35% cheaper in China or India and that many suppliers have also moved from Europe to Asia, affecting its import costs.
Impacts on Production and Employment
Production Plans and Sales Figures
Without giving precise details, Zetor said this year's production plan would not be affected. Sales reached 1,500 units last year, it said.
Job Cuts and Retained Operations
The shift to Asian manufacturing means 33 Czech jobs are cut, but staff for servicing, logistics, sales, marketing and other segments will stay at the company's Czech headquarters.
Reporting and Editorial Credits
(Reporting by Jason Hovet; editing by Barbara Lewis)
